If we glance up from our mobile devices long enough, we might notice a startling trend. Bank branches are disappearing from communities throughout the nation, including Dallas.
In February, The Wall Street Journal reported that for the 12 months ending in June 2017, the number of branches nationwide fell by more than 1,700, the biggest decline on record.
Texas, by the way, led all states during that period with 149 closures.
Between 2008 and 2017, 52 bank branches closed in Dallas County, according to the National Community Reinvestment Coalition, a nationwide financial advocacy group. That translates to an 8 percent contraction and among the highest rates of all U.S. counties, NCRC found.
Overall, U.S. banks are healthy and looking for even stronger performances after last year’s overhaul of federal tax laws. In some of the first quarterly reports posted since the new rules took effect, profits grew for several of the nation’s largest banks.
So why is the industry seeing a historical shift with branch closures and one that’s expected to continue for at least the short term?
The trend is traced to a number of sources, beginning with the 2007-08 economic crisis and the Great Recession that followed. Shutting down lower-performing branches was part of an initial belt-tightening resulting from banks having to cut costs.
Many industry observers say stricter financial regulations passed in the wake of the crisis played a part by further chilling banks’ growth. Those observers, such as the American Bankers Association, argued that while tighter regulations were likely needed after the crisis, the rules grew increasingly complicated, even contradictory in some cases, which limited banks’ expansion opportunities.
Of course, those mobile devices we’re looking at have played a part, as well, along with changing consumer preferences. Modern customers have, for the most part, embraced the convenience of handling routine transactions through online banking, mobile apps and ATMs, reducing the need for brick-and-mortar branches.
Electronics and cash machines don’t solve everything. NCRC’s analysis shows, for example, that branch closures have led to what the group calls “banking deserts” within geographic markets. The lack of financial services in these areas disproportionately impact low-income residents, the report found, because those residents are less likely to have mobile devices and internet access.
When all of these are considered, the value of the human touch can’t be overlooked, cautions Warrie Birdwell, regional president for Origin Bank.
“The level and kinds of changes we’re seeing make it even more important to have a bank that provides individual, personal attention,” Birdwell says. “Origin’s philosophy is that it doesn’t matter if you log on from your phone in the middle of nowhere or sit down in a branch, you should feel comfortable with your bank. You should feel like somewhere on the other side, there’s a living, breathing human being who understands your personal needs and the challenges you face.”
He says the same holds true for business customers, who typically have their own banking preferences. They tend to be more sensitive to fees, for example, and prefer conducting transactions in person to help avoid paying them. Indeed, a nationwide survey of small businesses conducted by ath Power Consulting showed that more than a quarter of respondents preferred banking at physical branches ‒ a rate twice that for consumer accounts. The survey also found that small business owners want digital services, but not at the expense of speaking to someone in person.
Businesses expect a higher level of contact and trust with lenders, which starts with personal contact.
“We know there will always be a space for personal service when it comes to banking, because our business customers prove that,” Birdwell says. “Origin has great commercial services, but the people who stand behind those services are just as valuable, because your bank should be your partner. The only way to accomplish that is to get to know each customer’s individual needs.”
Origin places major emphasis on a corporate culture that Birdwell admits isn’t easy to describe.
“It’s something you really have to experience to understand. We’re here for the journey. We want to see a business plan the way the client does ‒ as a way to achieve a dream.”
That kind of relationship between bankers and customers isn’t created with the flip of a switch. It’s an investment of time and energy from both sides. Birdwell says that ultimately, it’s a better way of doing business for everyone. Customers benefit from a richer level of service, while bankers gain insight that leads to informed decisions.
“That kind of banking is good business in any economic climate, in any type of industry trend or business model,” he says. “When everybody focuses on the human side of the equation, all sides benefit. We elevate the customer’s experience, and the customer has a better chance at success.”
Warrie Birdwell is an employee of Origin Bank and Chris Bordano and Chase Schavrda are small business owners of Marlin Landscape Systems. To learn more about relationship banking, visit Origin.bank. Member FDIC.